California's current energy plans call for increased reliance on natural gas to
meet its growing electricity demand. The California energy crisis of 2000 and
2001 has spurred strong growth in new electric generating capacity–most of it
fired by natural gas. As a result, consumption of natural gas for electricity
generation could double between 2000 and 2010. The increased demand for
natural gas will place a burden on an already constrained pipeline system that
serves California and other western states. This report describes likely problems
and potential options for addressing and preventing problems in natural gas
management in California due to this trend. While the analysis takes a
California-centric view, California's dominance as an energy consumer in the
West highlights the regional scope of the problem.In the analysis, we address the following natural gas demand, supply, and
transportation issues:

1.

We project a range for future California natural gas demand providing upper
and lower estimates. California gas demand could increase by between 18
and 50 percent by 2010.

2.

California is a natural gas producer, but the share of demand met by local
production will remain small. California's reliance on imports may grow
sharply over the next decade.

3.

Even though it appears that sufficient resources exist to meet demand
growth in California and the West, California will have to compete with
neighboring states for natural gas supplies. There is considerable evidence
that the current pipeline infrastructure is operating very close to capacity and
that plans for interstate pipeline expansion may lag behind expected demand
growth. Expansion plans for interstate pipeline capacity will, at best, only
marginally meet requirements given anticipated demand growth throughout
the West.

4.

The shift toward gas-fired electricity generation is having an effect upon gas
delivery infrastructure in the state. It appears that current publicly available
plans for expansion of receipt and storage capacity by 2010 are inadequate to
meet the level of gas demand growth projected for California.

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